Multi-Banking Advantages For Entrepreneurs And Small Businesses

In the digital world we live in today, everyone wants to squeeze every bit of profit they can by unlocking new revenue streams and opening themselves to the global market. But tackling the entire world, and being able to process payments in different currencies requires some banking strategies.

That’s why most people turn to multi-banking models. Every bank has its own unique features and offers, and even though most of the time they are pretty much the same, sometimes some banks are better than others in terms of certain features.

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So, what’s the goal here?

Well, as we mentioned before, we have to find certain features that will help us with our financial operations and get the benefits from different banks. For example, some banks are better for international transactions, while others offer better rates for savings.

In today’s article, we will take a look at all the multi-banking benefits that offer entrepreneurs and small businesses flexibility, which is most important in today’s fast-moving world.

What is Multi-Banking?

If you still don’t know what is multi-banking, let’s explain. Well, the name is self-explanatory, to be honest. It is a practice of using multiple bank accounts across different banks to manage your financial operations.

In other words, it is a way for entrepreneurs and small businesses to leverage the unique benefits and services offered by different banks, optimizing their financial management, offering more flexibility, and lastly reducing risks.

It’s like making a list of all the groceries you need and going through each grocery store to find the best deals for those products.

Flexibility and Risk Management

Ever heard of the saying, “Don’t put all your eggs in one basket?” It’s a cliché for a reason. By spreading your finances across multiple banks, you minimize risks. If one bank faces a glitch, regulatory issue, or—heaven forbid—fails, you have backups. This is especially crucial for small businesses that can’t afford downtime.

According to a study by Finextra, 60% of SMEs using multi-banking reported enhanced financial stability and reduced risk exposure.

Nowadays we have online banking platforms like Genome that offer special multi-currency accounts for both individuals and businesses. So, if you do a lot of international transactions, it is probably a good idea to have a multi-currency banking account just so you can lower your exchange fees.

Then you can move your funds from there to a savings account that pays a better interest.

Financial Visibility and Control

Managing finances across multiple banks can sound like a headache. But with the advent of Open Banking APIs, it’s more manageable than ever.

Tools like Tink, Zuper, and Outbank consolidate your financial data into one dashboard. This centralized view can help you keep track of cash flows, expenses, and overall financial health without switching between multiple bank apps.

What are the Benefits?

  • Centralized financial management.
  • Enhanced transaction monitoring and fraud detection.
  • Better control over financial data with improved insights.

Cost Efficiency

Surprisingly, multi-banking can save you money. Different banks offer various perks like lower transaction fees, better interest rates, or fee-free accounts. By leveraging the best features of each bank, you optimize your financial operations.

Relay’s business checking account offers unlimited fee-free transactions and no overdraft fees, while another might provide higher interest rates on savings​.

Financial management

Enhanced Financial Services

Different banks excel in different areas. Some may offer superior loan products, while others might have cutting-edge payment solutions or integrations with your favorite accounting software. By using multiple banks, you can cherry-pick the best services each one offers.

Leveraging Technology

Modern banking APIs and host-to-host communication have revolutionized how businesses interact with banks. APIs provide real-time data and enable seamless integration with your business systems. This is not just for large corporations; small businesses can also tap into these technologies to streamline operations.

Pros of Bank APIs:

  • Real-time access to financial data.
  • Simplified account reconciliation.
  • Enhanced data security through tokenized access​​.

Practical Tips for Multi-Banking

1. Know Your Needs:

Evaluate what each bank offers and how it aligns with your business goals.

2. Use Aggregator Tools:

Tools like Tink and Zuper can simplify management by providing a single interface for all your bank accounts.

3. Monitor and Adjust:

Regularly review your accounts to ensure you’re benefiting from the best rates and features.

4. Stay Secure:

Ensure all banks and tools you use comply with regulations like GDPR and PSD2 for data security​.

Final Words

Multi-banking is something that is quite common nowadays. Everyone from individuals to small and even big business owners tries to diversify their assets keep them in multiple bank accounts, and leverage the unique features that come from each bank.

It’s like picking all the deals when going shopping but only wrapped in a financial blanket. I think everyone should consider multi-banking just because it lowers the risk of keeping the money in one bank, and at the same time comes with multiple benefits that can help you manage your finances more efficiently.